3.1 Dismissing an incumbent strata manager | Owners Corporation Network

3.1 Dismissing an incumbent strata manager

Some points to consider if terminating are:

  • For agreements entered into after 1 September 2005, the Property, Stock and Business Agents Regulation 2003 provides that the agreement must not contain a provision that to renew the agreement for a subsequent fixed term of more than 3 months unless the agreement also provides for termination by giving 3 months’ notice at any time during the subsequent term. What this means is that strata management contracts will roll-over automatically after the first fixed period, and can be terminated with for 3 months notice under the clause above. 
  • If the agent is being dismissed during a minimum tern contractual period, advice should be sought in regards to the termination conditions, balance of the agreement, repudiation, including payments etc which are detailed in the agent's contract. Termination of a contract may occur where there is poor performance by a strata manager.
  • A strata manager can only be dismissed, or have a delegation changed by a simple majority resolution at a general meeting of the owners corporation. It cannot be done by the decision of the executive committee alone.
  • Written notice of the decision must be given to that agent.
  • Obstacles a scheme may face in the process of terminating an agreement may include difficulty in convening a meeting, obtaining strata roll and documents from the strata manager, liens and refusal to hand over the scheme’s records.
  • It would be unwise to terminate a strata manager’s agreement before an agreement with a new strata manager has been settled. Otherwise the owners corporation could find itself without a strata manager. Remember the Agreement with the new strata manager will have to be approved by owners in a general meeting.
  • When intending to terminate a strata manager, it is more courteous and tactical to run a general meeting without the help of the existing agency (i.e. for the secretary to set a date, time and do the mail out themselves, with the help of the new agency for the wording of necessary motions. The Secretary is able to do this – the strata agency only runs meetings under delegation of authority.). It also makes sense for the committee to communicate to all owners about the reasons for the change and about the new recommended agency.
  • To be efficient, when the committee puts a motion to terminate a strata agency, it would usually also include its own motion to engage a particular new agency. That way the whole process is carried out at one General Meeting.

Even if the outgoing strata manager is cooperative, you can expect considerable disruption to processes as a new working relationship is established.

Relevant NSW Legislation: The Property, Stock and Business Agents Act (2002)

Schedule 14: Clause 3: Renewal of agreement for fixed term

 

Relevant NSW Legislation: Strata Schemes Management Act (1996)

Section 27 (2): How is a strata managing agent appointed?